Why You Need To Start Saving In Your 30s To Retire Comfortably In Your 60s

Photo by Harli Marten on Unsplash

Retiring is the most important life decision you will ever make. And yet, it can be tough to know how much you should budget for your retirement years. 

This article explores the best methods for estimating your retirement needs and provides an estimate based on your current wage. It also offers advice for securing your future with Singapore's retirement schemes.

Average Retirement Spending

According to research done by the Lee Kuan Yew School of Public Policy, a single elderly household will require $1,379 a month while an elderly couple will need $2,351 a month just to meet the basic needs. 

Combined with the compound effect of inflation and depending on the lifestyle that you want to be living, retiring comfortably would mean that saving an average of $1,400 per month per person might still not be enough for you. Furthermore, you will still have to take into account any unforeseen expenditure (e.g. medical bills). 

Imagine if you retire at the official Singapore retirement age of 62. With all your planning, you come down to an average of $2,000 monthly spending (say, you would like to spend more on some tech devices and plan for a yearly getaway while you can still travel). With the CPF monthly payout starting at 65 years old, you would need $72,000 just to sustain your lifestyle before the monthly payout kicks in. 

Doesn’t seem like much right? But you will have to factor in the retirement sum that you have to keep in your CPF when you reach 55. In order to get a monthly payout of $2,000 starting at age 65, you will have to have the enhanced retirement sum of $264,000 in your CPF at 55 years old (according to data compiled by the CPF board in 2019). In total, that means that you will need $336,000 just to cover your expenditures. Unless you are willing to compromise on your lifestyle after retiring, it seems that retiring is something that you really have to plan for. 

And you have to realize, all of that is for a single person to retire. 

That’s why wealth planning is really important in Singapore. If you’re still unsure, why not click here to schedule a free call with us to see what steps you can take to prepare for retirement. 

The Difficulty of Saving Up

While it seems that simply saving $336,000 is enough to retire comfortably, the truth is that reaching this amount of savings is really difficult in reality. 

Say you start saving for retirement at 30 years old. To retire at 60, you will have only 30 years to save up the $336,000. This works out to $11,200 a year or $933 a month. Even if you start saving at 30, a huge chunk (close to $1,000 monthly) of your salary has to go into retirement saving monthly. 

Furthermore, at 30 years old, many of us will have other financial commitments that make saving up for retirement consistently difficult. Paying off housing loans, putting money aside for emergency funds, increased family spending for those with children, and maybe even the need to financially support your retired parents might cause you to be unable to begin planning for your retirement.

In reality, it is not common for most people to have a comprehensive retirement plan (and stick with it) when they are 30. Most would adopt a “save what we can” attitude, which is not enough in most cases. If we begin to start saving up (conscientiously) at 40 instead, the average monthly amount rises to $1,400. 

The True CPF Monthly Payouts

The true difficulty behind saving up for retirement is reflected in the average amount of CPF monthly payouts. 


When we look at data compiled on the Household Expenditure Survey 2017/18, the average retiree only got a measly $361 for their monthly payments. Even those living in landed properties only got an average of $867 monthly.

That’s peanuts compared to the targeted amount of $2,000.

This means that in reality, we cannot simply depend on saving up for CPF monthly payouts and relying on it for our post-retirement spending. We need to begin wealth planning and prepare ourselves for retirement instead.

If you’re interested to read more specifically into this, check out what you should be doing in your 30s and 40s to retire comfortably in Singapore.

The Difficulty of Saving Up

To make things even more difficult, we have to consider the fact that with inflation, the true value of our money decreases. After saving $1,000 monthly religiously for 30 years, you might still find that you didn’t manage to save enough for retirement. This is due to the compound effect of inflation.

For example, say that you managed to put aside $100,000 for retirement by the time you reached 40 years old. In 20 years, assuming that Singapore keeps to MAS’s core inflation rate of 1.7%, you will only be left with about $71,000. 

In order to have $100,000 in 20 years, you would actually have to save up around $142,000 at 30 years old. 

Being Invested to Beat Inflation

With the difficulty of saving up combined with the effects of compound interest, it might seem difficult for you to achieve your retirement goals.

However, not all is lost. When we study the individuals who manage to retire comfortably, investments make up a large portion of their retirement income. That’s why it is important for you to invest your money smartly.

After all, wouldn’t it be great to have your money work hard for you so that you can retire early and comfortably? 

What are you waiting for? Begin taking the right steps by going through our property income masterclasses today. 

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